At Baron law, we help you and your loved ones plan for the future. We provide legal advice in estate planning, real estate, business law, divorce, and landlord/ tenant law. One of the most important ways that we help you plan for the future is with family trusts.
What is a Family Trust?
A family trust is a contract or a set of instructions that you’re telling the world that you want to have followed after you’ve passed.
Many people think that a trust and a will are the same thing. However, a trust is different from a will. A will is also a set of instructions, but a will is a defined distribution, whereas with a trust you still have control even after you’ve passed many years down the road.
Family trusts are used to avoid probate and help save on taxes. The family exemption these days is 10 million dollars or more.
Although, taxes are not as important as they were before it is important to keep in mind that that federal exemption changes all the time. Ten years ago, it was only 1 million. So, it may not be on the radar today, but it certainly could be down the road. This is important because you don’t know when your trust is going to go into effect.
The most common reason for having a family trust is for asset protection. Trusts are about having that shield for your children after you’re gone so that creditors, litigation, or a divorce, those things can’t attach interest to your estate after you’ve gone.
Why are Family Trusts Better Than a Will?
The number one reason to have a trust is probate. According to the AARP, the average cost of probate is between 5 and 10 percent of the total value of an estate.
For example, if you have a five hundred thousand dollar estate, at a minimum, you’re going to spend twenty-five thousand dollars administering it through probate.
Having a trust is better than a will because of privacy; all of the information is public when going through probate. Someone could go to the courthouse and obtain the information, and now it is easier than ever to get this info because everything is online.
Having a trust is more cost- effective than a will. The average time in probate is 18 months and the minimum time in probate is six months. So, you could administer your estate through a trust in a matter of months if you’d like more to carry it on for the legacy and lifetime of your family to ensure that there is asset protection.
Who Should be Implementing a Family Trust Into Their Estate Plan?
Everyone should consider a family trust. However, there are certain criteria for people who we strongly suggest having a family trust.
- People who have children with spending problems.
- People who have children who are special needs.
- People who have children who have any risk of divorce.
How Soon Should I Start to Plan for My Estate?
As soon as possible. The bottom line is that no one knows when they will pass, and it is better to have these safeguards in place to protect your assets and your family, especially if you have children.
If you have not considered a will or a trust or you have any questions about a family trust, contact us at Baron Law today. You can go to our website for a free consultation so you can start planning for the future for yourself and your loved ones.